Mahindra & Mahindra (M&M) Ltd is inching closer to becoming the largest tractor manufacturer globally, overtaking John Deere of the US. Talking to the media on the occasion of announcing a joint venture (JV) with China?s third largest tractor maker Jiangsu Yueda Yancheng Tractor Manufacturing Company Ltd, Anand Mahindra, vice chairman and managing director, Mahindra Group, said, ?For a long time, the Mahindra Group has been aspiring to become number one in the world. And with this, we will be able to achieve that in a much better fashion.? While Mahindra does not want to be over-optimistic about the numero uno position, figures reveal that the company is not far from the largest player now, John Deere, which sold around 1,60,000 tractors last year. ?If you take the total sales of M&M, Punjab Tractors and Yancheng Tractors together, which stands at around 1,70,000 units, we would have already reached there next year,? said Bharat Doshi, chief financial officer, Mahindra Group.

M&M will hold 51% (approximately $26 miilion) stake in the Chinese JV through its subsidiary, Mahindra Overseas Investment Company (Mauritius) Ltd. The tractor related assets and current liabilities of Yancheng Tractors will be transferred to the JV. The value of the net assets transferred to the JV will be around $50 million (RMB 335 million). Mumbai-based Kotak Investment Banking was the financial advisors for this deal. This is the second tractor venture of Mahindra in China, in addition to Mahindra?s current tractor business namely, Mahindra China Tractor Company Ltd (MCTCL). Indicating that China is the fastest growing tractor market, Anjanikumar Choudhari, president, farm equipment sector, Mahindra & Mahindra Ltd, said, ?We have a long term plan for the Chinese market which is growing at a rate of 40% y-o-y.? On the synergies between the two companies, Chouhdari said that the research and development capabilities will be shared between M&M in India and the new JV. The company will also consider the use of M&M fuel efficient engines over Yancheng Tractors?.

?We will have a product range starting from 16 HP to 125HP. We will also have a large manufacturing base which will be used to not only produce for the domestic market but also for low cost manufacture for exports,?? he said.